The economy of the eastern Mediterranean went from being a unified whole under the Ottomans 100 years ago to increasing fragmentation in the Twentieth Century. This trend was especially apparent in 1950 when Lebanon and Syria broke off their customs union, and the latter proceeded to erect higher tariff barriers, eventually being emulated in this respect by Jordan, which also wanted to protect “infant” industries.
This issue was highlighted — and remedies for it sought — in a workshop held last month in Beirut by the United Nations Economic and Social Commission for Western Asia and the World Bank on “Regional Cross-Border Trade Facilitation and Infrastructure for Mashreq Countries.” Addressing the event, Hedi Larbi, director of the World Bank’s Middle East department, noted that “trade exchange within the Arab world is very weak in comparison with other regions of the world,” amounting to only 13 percent, compared to 21 percent in Latin America and almost 35 percent in East Asia.
Trade within sub-regions of the Mashreq is higher than that of the Arab countries taken as a whole, with Lebanon and Jordan in particular being states that do a lot of their trade with each other, and with others in the region. That point was underlined during Jordanian Prime Minister Samir Rifai’s visit to Beirut in March. During the trip, Rifai signed a number of bilateral agreements with Lebanon covering cooperation in industry, agriculture, higher education and scientific research, among others. He also stressed the need to speed up implementing the 2002 accord establishing free trade between the two countries. All this should further boost merchandise trade between the two countries, which stood at $288 million last year, an 18 percent increase over 2008. The two sides also underlined the need to promote the booming Mashreq tourist industry by conducting joint tourism fairs to sell Lebanon and Jordan as one destination.
Yet this spirit of co-operation was not always there; just as economic arguments restricted trade in goods among the countries of the Mashreq in the past 60 years, other considerations also played a role in stifling services industries. A case in point of such restrictions was the imposition of visa requirements on Lebanese travel to Jordan in the late 1970s, a step promptly followed by a quid pro quo retaliation from Beirut mandating visas for Jordanians wishing to enter Lebanon. This led to a drop in tourists heading from Amman to Beirut and vice versa, as well as diminished transport between the two countries. One result of such measures was that during the 1980s and 1990s there was a decline to only a few flights per week between the two countries, which was logical in view of falling tourist traffic. In 2005 that changed with abolition of visa restrictions for Lebanese and Jordanians in each other’s countries.
Royal Jordanian today thus has no fewer than 28 flights per week between Amman and Beirut, with Middle East Airlines also running more than one daily flight between the two capitals. Likely a result of the cancellation of visa requirements, the number of Jordanian visitors to Lebanon in 2009 was a huge 225,000, a big increase over the figures five years earlier and an example of how removing restrictions can enhance business across borders. These and similar points were made by the Jordanian premier during his latest visit to Lebanon.
At the Beirut Chamber of Commerce and Industry, Rifai outlined trade and investment prospects in the kingdom in preparation for a visit by members of the Lebanese private sector to Jordan in April. He also reviewed Jordan’s vision to build strategic relationships in the region through joint projects in the field of transport, especially railroads. That, of course, would also involve Syria, but Damascus is on board in efforts to remove obstacles to the smooth flow of goods, individuals and investments between the Mashreq countries to gradually lead toward their integration.
RIAD AL-KHOURI is a senior economist at the William Davidson Institute at the University of Michigan in Ann Arbor, and dean of the business school at the Lebanese French University in Erbil, Iraq